The Cost Of Congestion

May 16, 2001

Last week's Urban Mobility Report by the Texas Transportation Institute showed that traffic really has gotten much worse over the last few years. A major reason congestion is increasing is that the choices we make don't reflect the true costs of our actions, says economist Paul Krugman.

When you or I decide to drive during "congested time" -- which used to be called "rush hour," but now lasts about six hours every day -- we make that congestion a bit worse, and thereby impose a cost on all the other people trying to get somewhere. (And they do the same to us -- we are all both perpetrators and victims.) That's a very real cost, in time and money; but it's a cost we as individuals don't take into account.

Here is a rough calculation of this hidden cost for greater Atlanta:

In 1999, the average Atlanta resident lost 53 hours to traffic delays, compared with only 25 hours as recently as 1992.

Over all, traffic congestion cost Atlanta $2.6 billion in 1999; had delays been no worse than in 1992, that cost would have been $1.4 billion less.

Congestion got worse because the roads have been clogged with ever more cars: between 1992 and 1999 vehicle registrations rose by 550,000, and perhaps an extra 400,000 cars were actually driven during peak times.

Each individual's decision to commute by car in Atlanta imposes congestion costs of $3,500 per year, or $14 per workday, on other people -- over and above the costs actually paid by the driver himself.

Thus driving in Atlanta is in effect heavily subsidized, because people don't have to pay for the costs they impose on others. Put another way: our system doesn't give people the right incentives.

Source: Paul Krugman, "Nation in a Jam," Reckonings, New York Times, May 13, 2001.